Tamilnad Mercantile Bank Ltd., Virudhunagar V. ITO, Virudhunagar

ITA 3093/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7918 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 06-01-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 22-12-2014
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: SHANMUGAVEL
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO. 3093/MDS/2014 / ASSESSMENT YEAR : 2013-14 TAMILNAD MERCANTILE BANK LTD 280, MADURAI ROAD VIRUDHUNAGAR - 626001 VS. THE INCOME TAX OFFICER TDS WARD VIRUDHUNAGAR [PAN AAACT 5558 K] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI SHANMUGAVEL, CA /RESPONDENT BY : SHRI N. MADHAVAN, JCIT / DATE OF HEARING : 06 - 0 1 - 2016 ! / DATE OF PRONOUNCEMENT : 19 - 0 2 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, MADURAI , DATED 29.10.2014 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. SHRI SHANMUGAVEL, LD. REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE INTEREST PAYMENT TO M /S V.S.V.N. POLYTECHIC, VIRUDHUNAGAR U/S 194A OF THE ACT. TH E DEPOSITOR, M/S ITA NO. 3093/14 :- 2 -: V.S.V.N. POLYTECHNIC WAS FOUND TO BE NOT ELIGIBLE F OR EXEMPTION UNDER THE INCOME-TAX ACT, THEREFORE, THE BANK REMITTED TH E ENTIRE TDS AMOUNT ON 26.6.2013 AND PRODUCED CHALLAN BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER FURTHER FOUND THAT IN RESPECT OF 19 DEPOSITORS, THE ASSESSEE HAS PAID INTEREST EXCEEDI NG ` 10,000/- AND DEDUCTED TAX. HOWEVER, AFTER RECEIVING FORM 15G/15H , THE DEDUCTOR BANK MADE A REVERSAL ENTRY IN THE BOOKS OF ACCOUNT AND THE TAX DEDUCTED WAS NOT DEPOSITED TO THE GOVERNMENT ACCOUN T. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T THE DEPOSITORS ARE SENIOR CITIZENS AND THEY FILED FORM 15H BELATEDLY A FTER THE TAX WAS DEDUCTED ON THE INTEREST PAYMENT. SINCE THE TAX WA S NOT DEDUCTIBLE IN VIEW OF FORM 15H FILED BY THE RESPECTIVE SENIOR CIT IZENS, THE ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING INTEREST U/S 2 01(1A) OF THE ACT. WHEN THE MATTER WAS CARRIED BEFORE THE CIT(A), HE C ONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT F ORM 15H HAS TO BE OBTAINED AT THE TIME OF PAYMENT/CREDIT OF INTEREST. SINCE FORM 15H WAS NOT AVAILABLE AT THE TIME OF CREDIT OF INTEREST , THE ASSESSEE-BANK IS EXPECTED TO DEDUCT TAX ON THE INTEREST PAYMENT. HAVING DEDUCTED TAX, THE NATURAL COURSE OF ACTION LEFT TO THE DEDUC TOR IS TO REMIT THE SAME TO THE GOVERNMENT ACCOUNT. 3. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE F ACT THAT TAX WAS DEDUCTED BY THE ASSESSEE IS NOT IN DISPU TE. IT IS ALSO NOT IN ITA NO. 3093/14 :- 3 -: DISPUTE THAT THE RESPECTIVE SENIOR CITIZENS TO WHOM THE INTEREST PAYMENT WAS EITHER PAID OR CREDITED, FILED FORM 15H BEFORE THE DUE DATE FOR DEPOSIT OF TAX DEDUCTED AT SOURCE. SINCE THE SENIOR CITIZENS FILED FORM 15H AND THEIR INCOME WAS NOT EXCEEDED TH E TAXABLE LIMIT, THE ENTRY WAS REVERSED IN THE ACCOUNTS OF BANK, THE REFORE, THE AMOUNT WAS NOT DEPOSITED IN THE GOVERNMENT ACCOUNT. THERE FORE, IT IS NOT A CASE OF SUO MOTU REFUND OF THE TAX DEDUCTED AT SOUR CE, BUT IT IS A CASE OF REVERSAL OF ENTRY SINCE IT WAS WRONGLY DEDUCTED. ACCORDING TO THE LD. REPRESENTATIVE, WHEN THE RECIPIENTS OF THE INTE REST HAVE NO TAXABLE INCOME THEN THE LIABILITY TO DEDUCT TAX DOES NOT AR ISE AT ALL. THEREFORE, THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHEN THE PAYMENT OF I NTEREST EXCEEDS ` 10,000/-, THE ASSESSEE HAS NO OTHER OPTION EXCEPT TO DEDUCT TAX AS PROVIDED U/S 194A OF THE ACT. IF THE RECIPIENTS O F THE INTEREST FILE FORM 15H DECLARING THAT THEIR INCOME DOES NOT EXCEE D THE TAXABLE LIMIT THEN THE ASSESSEE NEED NOT DEDUCT TAX AT ALL. IN THIS CASE, ACCORDING TO THE LD. DR, FORM 15H WAS NOT FILED AT THE TIME O F EITHER PAYMENT OF INTEREST OR CREDIT OF INTEREST, THEREFORE, THE ASS ESSEE HAS RIGHTLY DEDUCTED TAX. AFTER RECEIVING FORM 15H BELATEDLY, THE ASSESSEE REFUNDED THE TAX DEDUCTED BY REVERSING THE ENTRIES. THIS AMOUNTS TO ITA NO. 3093/14 :- 4 -: REFUND OF TAX DEDUCTED BY THE ASSESSEE-BANK. ACCO RDING TO THE LD. DR, THERE IS NO PROVISION IN THE INCOME-TAX ACT, 19 61 TO REFUND THE TAX DEDUCTED BY THE DEDUCTOR. THEREFORE, THE CIT(A) H AS RIGHTLY DIRECTED THE ASSESSEE TO REMIT THE TAX DEDUCTED AND LEVIED INTEREST U/S 201(1A) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOT IN DISPUTE THAT THE ASSESSEE INITIALLY DECDUCTED TAX AT THE TIME O F EITHER PAYMENT OF INTEREST OR CREDIT OF INTEREST. SUBSEQUENTLY, THE ASSESSEE CLAIMS THAT IT RECEIVED FORM 15H FROM THE RESPECTIVE DEPOSITORS. ACCORDINGLY, THE TAX DEDUCTED WAS CREDITED TO THE RESPECTIVE ACCOUNT S BY MAKING A REVERSAL ENTRY. THE CIT(A) BY PLACING RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVER AGE(P) LTD VS CIT, 293 ITR 226163 TAXMAN 355 AND THE INSTRUCTION OF TH E CBDT IN CIRCULAR NO.275/201/95-IT(B) DATED 29.1.1997 FOUND THAT WHEN THE RECIPIENT PAID THE TAXES THE TAX NEED NOT BE RECOVE RED FROM THE DEDUCTOR FOR HIS FAILURE. THE REVERSAL ENTRY MADE BY THE ASSESSEE WOULD AMOUNT TO NON-DEDUCTION OF TAX. THE FACT REM AINS THAT THE RESPECTIVE DEPOSITORS FILED FORM 15H WITH THE ASSE SSEE, OF-COURSE, BELATEDLY. WHEN THE RESPECTIVE RECIPIENTS OF THE I NTEREST DECLARES THAT THEY ARE HAVING NO TAXABLE INCOME THEN ONLY THE AS SESSEE IS NOT EXPECTED TO DEDUCT TAX. AS RIGHTLY OBSERVED BY THE CIT(A), THE ITA NO. 3093/14 :- 5 -: REVERSAL ENTRY MADE BY THE ASSESSEE-BANK, AT THE B EST, MAY AMOUNT TO NON-DEDUCTION OF TAX. IT CANNOT BE CONSTRUED AS REFUND OF TAX BY THE ASSESSEE. ONLY BY WAY OF A BOOK ENTRY IT WAS SHOWN AS DEDUCTED. BEFORE THE DUE DATE FOR DEPOSITING OF THE FUNDS THE ASSESSEE HAS RECEIVED FORM 15H, THEREFORE, THERE WAS A STATUTORY OBLIGATION ON THE PART OF THE ASSESSEE TO FORWARD THE FORM 15H TO TH E RESPECTIVE COMMISSIONERS. AT THE BEST, IT CAN BE SAID THAT TH ERE WAS A DELAY ON THE PART OF THE RESPECTIVE DEPOSITORS IN FILING FOR M 15H. WHEN THE RECIPIENTS OF THE INTEREST ARE NOT LIABLE FOR TAXAT ION UNDER THE INCOME- TAX ACT, 1961 OR THEY HAVE FILED THE RETURN OF INCO ME AND PAID THE TAXES ON THE INTEREST INCOME, NATURALLY, THE ASSES SEE IS NOT LIABLE TO PAY THE TAX DEDUCTED U/S 201 OF THE ACT. WHEN THE RECIPIENTS HAVE NO LIABILITY TO PAY TAX, THE QUESTION OF PAYMENT OF IN TEREST DOES NOT ARISE FOR CONSIDERATION. HOWEVER, AS OBSERVED BY THE CIT (A), IT HAS TO BE VERIFIED WHETHER THE RECIPIENTS HAD PAID THE TAXES IF AT ALL THEY ARE LIABLE FOR TAXATION. IT IS ALSO TO BE VERIFIED WHE THER THE RECIPIENTS HAVE ANY TAXABLE INCOME IN THE LIGHT OF FORM 15H FILED B EFORE THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO EXAMINE WHETHER TH E RECIPIENTS HAVE ANY TAXABLE INCOME OR NOT. IF THEY HAVE TAXABLE IN COME IT ALSO NEEDS TO BE VERIFIED WHETHER THEY HAVE PAID TAXES ON THE INTEREST PAID BY THE ITA NO. 3093/14 :- 6 -: ASSESSEE AND THEREAFTER, THE ASSESSING OFFICER SHAL L DECIDE THE MATTER IN THE LIGHT OF THE OBSERVATION MADE BY THIS TRIBUN AL IN THIS ORDER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 19 TH FEBRUARY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF